|
Minibase in USD as of 24/04/06 |
|
|
% Change
2005 |
EPS %
Change 05 |
EPS % Change 06 |
% Change YTD |
EPS 1 Month Revisions (%) 06 |
EPS 3 Months Revisions (%) 06 |
|
Dow Jones World
/1/ Basic Materials |
18.8% |
18.9% |
17.6% |
20.9% |
3.9% |
8.7% |
|
Dow Jones World Bench |
9.3% |
12.7% |
13.9% |
9.5% |
1.5% |
3.0% |
Source: FactSet estimates
So why all the gloom now? Speculation seems to be exceeding the normalised demand rate which in other words is creating a bubble. Moreover a slightly slower growth in China and increasingly restrictive policies in world monetary policy are signals pointing towards underperformance in the 2nd half of this year. This has also directly affected the input costs for the auto, aerospace and component businesses.
So what now? In a global context, European Industrials and alternative energy sources are the flavours of the year. They will both directly benefit from direct investment.
|
Minibase (Local Currency) as of 24/04/06 |
|
|
% Change
2005 |
EPS %
Change 05 |
EPS % Change 06 |
% Change YTD |
EPS 1 Month Revisions (%) 06 |
EPS 3 Months Revisions (%) 06 |
|
FTSE All Share Ex Invt Bench (GB) |
17.7% |
21.6% |
10.6% |
9.2% |
2.1% |
3.9% |
|
DJ Stoxx 600 Bench |
23.4% |
25.9% |
7.6% |
9.5% |
0.6% |
2.3% |
|
Dow Jones World Bench |
9.3% |
12.7% |
13.9% |
9.5% |
1.5% |
3.0% |
Source: FactSet estimates
In the UK the story continues to be the same. Financials and basic resources continue leading the way. Surprisingly, the market remains fairly buoyant with EPS revisions exceeding the global rate.
|
|
Market Cap. |
% Change YTD |
% Change 2005 |
EPS % Change 05 |
EPS % Change 06 |
EPS 1 Months Revisions (%) 06 |
|
Prudential (GB Listing) |
15,196 |
15.9% |
21.4% |
40.7% |
1.6% |
16.4% |
|
Man Group (GB Listing) |
7,831 |
35.3% |
29.8% |
57.6% |
4.4% |
15.4% |
|
Antofagasta (GB Listing) |
4,844 |
31.5% |
66.7% |
41.4% |
-1.7% |
13.3% |
|
Anglo American Plc (Ordinary) |
36,763 |
24.4% |
60.6% |
52.8% |
22.9% |
6.7% |
|
Brambles Inds
|
3,165 |
4.9% |
60.2% |
27.1% |
5.4% |
6.5% |
|
Marks & Spencer Group Plc (Ordinary) |
9,871 |
17.7% |
47.2% |
49.5% |
17.6% |
6.2% |
Source: FactSet estimates
Overall we expect equity markets to perform robustly during the first half of this year, however we remain vigilant as the mounting exogenous factors which could easily turn the tide, for example the proliferation of instability in the middle east and a marked slowdown in China and India.
We remain very bullish on cyclicals as growth rates continue to remain strong globally. We strongly recommend underweighting defensives for the first half of this year, and favour growth stocks over value stocks.
These views are independent of FactSet Ltd and are proprietary to Bobby Rakhit. For the full report and individual sector reviews and recommendations please contact rakhitreport@yahoo.co.uk.